“A Big Enough Market”: Micro-grids with Storage in Rural India

Gary Swart, now a venture capitalist, was once the head of a Dropbox-like startup, Intellibank, which failed in the mid-aughts. Swart believes that his company ultimately went under because they tried to make their product be “all things to all people”, serving too many markets and lacking focus. Reflecting on the former company and why it failed, Swart identifies three things a successful company needs:

“A need for their product or service.

A big enough market because ‘even the best team with the best product will fail if its market does not exist.’

A way to get into that market in a cost-effective way. In other words, ‘make sure you have enough money to execute in that market.’”

A large underserved market for renewable energy and micro-grid storage exists in much of India, especially in rural areas. In 2011, at least 25% of the Indian population (approximately 320 million people) was without electricity. That percentage is even higher in rural areas, where roughly 45% of the population is neither electrified nor connected to the grid. Additionally, many urban areas that do have electricity experience rolling electricity blackouts.

A 2010 study by the World Resources Institute estimated the aggregated potential market for clean energy consumer products and services in rural India for consumers earning less than $1 a day to be $2.11 billion (USD) per year. Some small startups have already begun moving into this market space. Mera Gao Power, whose pilot facility was completed in August 2010, installs micro-grids for as few as 20 customers in rural, off-grid villages in Uttar Pradesh, a state located in North India. Its grids focus primarily on powering LED lighting and mobile phone chargers overnight with modest infrastructure—as little as two solar panels and a bank of lead-acid batteries at a cost of around $1,000.

As Swart hopes they would, Mera Gao Power has found a cost effective way to bring their product to people with a need for their service in a big enough market. As reported by New Ventures India, “MGP’s micro grids were custom designed around its customers’ priority demands of lighting and mobile phone charging. By focusing on priority services, MGP was able to develop the first ‘lighting utility’, India’s lowest cost and first unsubsidized, commercially viable micro grid. At the end of 2012, MGP was serving over 3,500 customers across 137 villages of Uttar Pradesh.”